Frequently Asked Questions

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  1. Firms’ project cost fee variations: Will a body face a net cost?

    MHCLG has stated that build-back grant payments will fund eligible project costs. The timing of a firm’s invoice and the grant payment may differ. MHCLG controls the grant process and will provide information on allocations and payment timing.

    MHCLG stated:

    “MHCLG has restated its position that it will incorporate the project change costs into its review of the grant allocation formula this autumn so that the project change costs charged to bodies are reflected in future build-back grant payments.”

  2. Firms’ project cost fee variations: Will bodies receive estimates of future body-specific build-back fees?

    Firms are expected to prepare a total build-back cost estimate for each individual audit and share it with the relevant body and MHCLG.

    This will give bodies early sight of the expected costs and the assumptions supporting them.

    The estimate will reflect the evidence, risks and work expected for that audit. We will use the estimate as a baseline when reviewing fee variation proposals, although the final cost may change if the scope, risks or circumstances of the audit change.

  3. Firms’ project cost fee variations: Will MHCLG fund the fee variation?

    MHCLG has confirmed that build-back grant payments will fund eligible project costs charged through PSAA’s fee variation process. MHCLG included these costs in its review of the grant allocation formula.

    MHCLG stated:

    “MHCLG has restated its position that it will incorporate the project change costs into its review of the grant allocation formula this autumn so that the project change costs charged to bodies are reflected in future build-back grant payments.”

  4. Firms’ project cost fee variations: Will PSAA provide clearer forecasts of future fee variations?

    We publish an annual fees research and information paper to help bodies understand the main factors likely to affect audit fees and future fee variations. The paper draws on information from firms, approved fee variations, changes in audit requirements and our wider fees research.

    The information paper for 2024/25 audits is available on our website.

    The paper provides a sector-wide view rather than a forecast for each body. Individual fee variations depend on the risks, evidence and work required for each audit.

  5. For a disclaimed audit, is the scale fee paid in addition to the fee variation?

    For bodies with only VFM arrangements-related fees and the fees for issuing a disclaimer opinion, there will be no separate scale fee charge. 

    For all other fee variations this will depend on the circumstances of each body.  Please note that for a disclaimed audit we will assess separately any fees in relation to audit work in response to elector queries and objections. 

  6. How are audit fee levels set for each individual body?

    PSAA must follow the requirements of the Local Audit (Appointing Person) Regulations 2015.

    The information we use to set the scale fees includes the previous year’s fees, fee variations that relate to recurrent requirements, and any new audit requirements. We consult annually on the proposed fee scale, and individual scale fees are published on this website each year once the fee scale is confirmed by our Board following consultation.

    We continue to pool scheme costs and charge fees to audited bodies in accordance with our published fee scale, as amended following consultations with scheme members and other interested parties. Pooling means that everyone in the scheme accesses the rates secured via our large-scale competitive procurement process, a key tenet of the national collective scheme.

    Additional fees (fee variations) are part of the legal framework. They occur if auditors are required to do substantially more or less work than anticipated, for example if local circumstances or the Code of Audit Practice change or if the Regulator (the FRC) increases its requirements on auditors. Our fee variations process ensures that fees for additional work are robustly assessed. Additional fees cannot be invoiced until we determine them.

    Our audit contracts provide for an inflationary increase for 2025/26 audits, based on the ONS annual CPI rate published prior to 1 April 2025, which was 2.8% on 26 March 2025. The increase applies to 2025/26 scale fees and the hourly rates for additional work submitted as fee variations.

  7. How are changes in audit requirements incorporated into the fee scale?

    The local audit regulations require PSAA to specify the fee scale before 1 December of the financial year to which the audit fees relate. When we consult on and set the fee scale, we aim to update fees to reflect changes in audit requirements. These have changed significantly in recent years due to increased regulatory challenge on audit quality, updated auditing and financial reporting standards, and the move to a VFM arrangements commentary.

    If a change in audit requirements is substantial and we can reliably estimate the additional fees, we will incorporate them into the fee scale as soon as we can. If we need more information, we use the  fee variations process in the interim to assess the ongoing additional work and fees needed. Regulation 17(2) of the Local Audit (Appointing Person) Regulations 2015 enables us to vary fees up or down, where substantially more or less work is needed to complete a Code compliant audit.

  8. How can my organisation reduce the risk of additional audit fees?

    Bodies can reduce the risk by:

    • preparing complete and materially accurate financial statements;
    • providing clear supporting working papers on time;
    • agreeing the audit timetable and information requirements with the auditor;
    • responding promptly to audit queries;
    • alerting the auditor early to significant transactions, accounting judgements or changes in group arrangements; and
    • discussing the expected scope and cost of additional work before it begins, where possible.

    These actions cannot prevent every fee variation, but they can reduce avoidable additional work and help bodies understand potential costs earlier.

  9. How can PSAA get the message out to all councils about the issues faced by local audit and support both councils and the audit partners in explaining this story?

    We have spoken and written often of the systemic issues facing the local audit system in the communications sent to S151 officers and Audit Committee Chairs, and we will continue to do so. We are also an active member of the Local Audit Liaison Committee, chaired by the FRC from May 2023 and attended by key local audit stakeholders. This enables us to feed in body and auditor perspectives to decisions about changes to the local audit framework, and the urgent need to address audit timeliness.

    Tony Crawley, PSAA’s Chief Executive, gave evidence at the March 2023 Public Accounts Committee (PAC) enquiry on the timelines of local government audit opinions in England. The transcript of the meeting can be accessed on the PAC’s website. The PAC continues to show an interest in the challenges affecting local audit. Steve Freer, PSAA’s Chair, also shared his thoughts in an article that considered the wider local audit landscape in October 2022.

  10. How can we engage with PSAA outside of the Scale Fee consultation?

    For fee-related matters, please contact us via our dedicated email address: feevariations@psaa.co.uk.

    For general enquiries, you can reach us at general.enquiries@psaa.co.uk.
    We also regularly attend Treasurer Society meetings and other sector events, including CIPFA regional events, where you are welcome to speak with us directly.